Economic relations between China and the United States have entered a new phase of tension after Beijing strongly responded to Washington’s decision to impose an additional 10% tariff on Chinese exports. In a retaliatory move, China announced a series of measures, including anti-monopoly investigations, tariffs on American imports, and tighter export restrictions on critical minerals.
Escalation and Countermeasures
China’s response to the tariffs imposed by former U.S. President Donald Trump’s administration included several measures targeting major American companies and key industries. The most notable actions were:
- Anti-monopoly investigation into Google: The Chinese government announced an anti-monopoly investigation targeting Google, which could result in restrictions on its operations in China, posing a significant challenge to one of the world’s largest tech giants.
- Blacklisting U.S. companies: China officially added Illumina, a biotechnology company, and PVH, the owner of global brands like Calvin Klein and Tommy Hilfiger, to its “unreliable entities list.” This move imposes strict restrictions on their investments and dealings with Chinese companies.
- Tighter export controls on rare metals: Beijing announced new restrictions on the export of molybdenum and tungsten, two essential elements in electronics, defense equipment, and industrial components. Notably, China controls 80% of the global tungsten supply, giving it a strategic advantage in the trade war.
- Tariffs on U.S. goods: Starting February 10, China will impose a 15% tariff on American coal and liquefied natural gas, along with a 10% tariff on crude oil, agricultural equipment, trucks, and large vehicles.
Potential Impact on the U.S. Economy
While some of these measures may not cause immediate large-scale damage, they send a strong message to Washington that China will not stand idly by amid continued trade escalation.
Economic analysts believe that restrictions on rare metal exports could be one of the most impactful measures on U.S. companies, as the United States heavily relies on these resources for its technology and defense industries. According to analysts at the Peterson Institute for International Economics, recent U.S. tariffs could cost the American economy over $100 billion between 2025 and 2040, even without further Chinese retaliation.
Further Escalation? Trump Warns of More Actions
Trump was quick to respond to China’s actions, stating in a White House speech that “China’s measures will not go unanswered, and we may soon expand tariffs,” hinting at the possibility of raising duties to 25% or imposing new sanctions on more Chinese companies.
On the other hand, Beijing seeks to contain the escalation without backing down, with economic experts viewing these measures as a “preemptive strike” aimed at deterring Washington from imposing further sanctions.
Could the Trade Conflict Extend to Europe?
The dispute is not limited to China, as the European Union may become Trump’s next target. The former U.S. president has threatened to impose “massive tariffs” on European imports, arguing that the EU’s trade surplus with the U.S. is “unfair.”
European Commission President Ursula von der Leyen responded to Trump’s threats by saying, “We will defend our interests by all means available, and we will respond appropriately if necessary.”
How Long Will the Trade War Last?
The escalating trade battle between the U.S. and China has entered a new, more complex phase, raising questions about how far this economic war will go and whether it will expand to include other global economic players.
